Humboldt County cannabis farmers protest tax, compliance costs

Salmon Creek resident and Cherry Valley Farms Inc. owner Tory Schanzle stands in the back of a packed Humboldt County Board of Supervisors chambers on Tuesday morning to protest the county’s cannabis cultivation tax and the costs of coming into compliance.
Will Houston — The Times-Standard

Garberville cannabis farmer and Palo Verde Ranch owner Mark Switzer (center) looks back during the Humboldt County Board of Supervisors meeting on Tuesday as Netflix documentary film crews document the scene. Switzer was one of more than 20 people who called on the board to address the permitting and tax costs on cannabis farmers who are working to join the legal market.
Will Houston — The Times-Standard

As Netflix documentary cameras were rolling, a host of cannabis farmers and industry stakeholders went before the Humboldt County Board of Supervisors in Eureka on Tuesday morning to voice their frustrations on the county’s marijuana tax and the costs of becoming legal.

Many farmers who received interim cultivation permits from the county in December 2017 said they were irritated that they had to pay the county’s cultivation tax — even if they didn’t grow any crop — while those who waited until 2018 to apply for a permit did not have to pay.

“I’ve never been closer to losing everything I’ve worked for than right now,” Humboldt County resident and cannabis farmer Harold English said to the board in the standing-room only meeting. “...You’re pushing us out. We’re your mom and pops. You’re going to push us out and change the character of this county.

Second District Supervisor Estelle Fennell said while the board could not hold a discussion on the issue because it was not on their agenda, the county is working to address many of the growers’ concerns this month.

Salmon Creek resident Nicole Keenan’s voice quavered slightly as she spoke to the board Tuesday. Keenan told the board she was upset because the regulatory costs and tax burdens of the legalized marijuana market were causing herself and others in her community to worry about whether they will be able to afford house payments let alone afford a move.

She said some businesses in the area are having sales because they don’t have enough customers to keep their business afloat.

Keenan said it all comes back to cannabis growers having to spend their last dollar to stay within the regulatory fold.

“You guys are wringing us dry, wringing us completely flipping dry,” Keenan said. “... Oh my god. The stress level is like, can I eat? Can I sleep? Can I feed my kid? Will I lose my house? Is the bank going to come after me? Will my car drive away because I can’t pay the bill?

“This is you guys. You guys are ruining our community,” Keenan continued, her voice breaking slightly. “This is the beginning of a disaster of economics in our area.”

More than 20 cannabis farmers and stakeholders traveling from communities like Miranda all the way to Orleans voiced similar concerns to the board Tuesday morning.

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Many said they felt betrayed by the county because they were told the small farmer would be protected if they came under the legal fold.

Many said they instead found that the costs to come under county protection were so high that they would have no place in the in the statewide market.

To address this, many farmers proposed the board change or completely repeal its cannabis cultivation tax. Another suggestion was for the county to issue more temporary permits to all farmers who are working to come into compliance so that they have a shot in the state market.

As farmers spoke and board members listened, film crews from Lightbox Productions moved about the chambers as part of a planned Netflix documentary focusing on the region’s cannabis industry and its impacts.

The county’s cannabis cultivation tax, Measure S, has been repeatedly criticized by the industry since being passed by the voters in 2016. The tax might also be the subject of a future lawsuit by Alderpoint cannabis attorney Eugene Denson, who claims the county illegally modified the tax without voter approval in June 2017.

Measure S taxes farmers $1-$3 per square foot of permitted cultivation area they have, with the rate depending on the type of grow.

Compared with the state cultivation tax, which assesses the tax based on the weight of cannabis flowers and leaves produced, the county tax is assessed based on the cultivation area on the person’s permit — regardless of whether they actually grow that amount.

Redcrest farmer and Sunboldt Grown owner Sunshine Johnston said this tax model only incentivizes larger grows with higher yields rather than allow small farmers to continue practices like crop rotation.

The county began issuing temporary permits to some growers in December 2017 so that they could apply for a state license before the Jan. 1 market opener. Many who received these permits in December said they were surprised to receive tax bills from the county asking them to pay the full year’s worth of taxes.

Those who waited until January to apply for an interim permit were not sent a tax bill.

Cannabis farmer Marion Collamer of the True Humboldt branding network described the growers who come through their doors as “broken, tired and financially strapped individuals who have parceled out their life savings in $20,000 and $30,000 increments to consultants for a ‘maybe.’ ”

“Taxing us to the brink of extinction is an unfair and ungrateful way to treat dedicated citizens and the architects of Humboldt County’s history,” Collamer said.

After listening to more than an hour of testimony, Fennell said that she and board Chairman and 5th District Supervisor Ryan Sundberg are in the process of finalizing the structure of a cannabis advisory committee. The proposed committee would look at several topics including the cultivation tax, Fennell said.

County Planning and Building Director John Ford is also presenting a proposal to the county planning commission Thursday that would allow the county to continue issuing temporary cannabis permits to growers who had farms in existence before Jan. 1, 2016.